Interim report January - March 2024

Challenging market conditions in Sweden - action program completed

JANUARY - MARCH 2024

·
· Net sales declined 21% (-3).
· EBIT amounted to MSEK -6.7 (27.8).
· EBIT margin amounted to -2.3% (7.5).
Net income was MSEK -8.1 (20.7).
· Loss per share2 amounted to SEK -0.16 (earnings: 0.41).

SIGNIFICANT EVENTS DURING AND AFTER THE QUARTER

· During the quarter, the announced action and efficiency program was completed, resulting in 40 redundancies in the Group.
· GARO E-mobility reported sales growth of 15% outside the Nordic region for the quarter. GARO has decided to intensify marketing activities in Germany and Poland, and to start up a sales company in Spain.
· In April, GARO Entity Compact was third-party certified by Tüv Syd, while GARO Entity Pro, which is already certified, received very high ratings in a number of independent market tests.

THE GARO GROUP1	Jan-Mar 2024	Jan-Mar 2023	+1- %	R12	Jan-Dec 2023
Net sales, MSEK	292.5	370.3	-21	1,292.3	1,369.9
EBITDA, MSEK	7.5	37.2		70.0	99.6
EBITDA margin, %	2.6	10.0		5.4	7.3
EBIT, MSEK	-6.7	27.8		16.7	51.1
EBIT margin, %	-2.3	7.5		1.3	3.7
Net income, MSEK	-8.1	20.7		2.6	31.3
Earnings/loss per share2, SEK	-0.16	0.41		0.05	0.63
Cash flow from operating activities, MSEK	-43.8	-46.6		28.7	25.6
Investments, MSEK	4.2	50.1		62.3	108.2
Depreciation, MSEK	14.2	9.4		53.3	48.6
Equity ratio, %	51.9	50.8		51.9	50.9
Equity per share2, SEK	12.16	12.71		12.16	12.19
Return on equity, %	0.4	14.1		0.4	5.1
Return on capital employed, %	2.5	15.6		2.5	7.9
Net debt (+) / net cash position (-), MSEK	277.9	245.6		277.9	222.1
Net debt (+) / net cash (-) excl. IFRS 16, MSEK	206.7	172.3		206.7	149.8

1) For definitions, see pages 18-20

2) Earnings per share were not diluted, so earnings/loss per share pertains to before and after dilution.

GARO AB (pub) Corp. Reg. No. 556071–772 is a company that develops, manufactures and systems for the electrical installations market under its own brand. GARO's customer offering in the product areas of Electrical distribution products, E-mobility, Project business & Temporary Power with a focus on electrical safety, user-friendlines and sustainability. GARO was founded in 1939, has its head office in Gnosjö and is today an international company with operations in seven countries in Sweden are located in Gnosjö and Hillerstop in Sweden and in Sczecin in Poland. GARO is listed on Nasdaq Stockholm under the ticker name GARO. For more information, see www.garo.se

CEO Patrik Andersson's comments on the quarter Challenging market conditions in Sweden – action program completed

Net sales for the first quarter of the year amounted to MSEK 292 (370), down 21% compared with the year-earlier quarter. The market, which slowed for both business areas at the end of 2023, remained cautious in early 2024. The lower quarterly sales were mainly due to a cautious market in Sweden. It was gratifying, however, that the Group's sales outside the Nordic region showed growth, which supports our investment in Germany which we entered at the end of 2023. International expansion is important to us, which is why we have started to establish operations in the Spanish market.

We had fewer working days during the quarter, as Easter fell earlier this year. The number of working days affects sales in both business areas, but GARO Electrification in particular as these products are used continuously by electricians in their daily installation work. We noted that sales recovered in April due to more working days, but also to some extent due to improved demand.

EBIT amounted to MSEK -6.7 (27.8), which was essentially due to the low sales volume during the quarter compared with the same quarter of 2023. During the quarter, we implemented an action program to adapt the organization in GARO E-mobility, but we are also prepared for a market recovery.

GARO E-MOBILITY

Sales in GARO E-mobility corresponded to an amount of MSEK 84, down 31% compared with 2023. The prevailing market situation with macroeconomic uncertainty continued to affect purchasing patterns and investment decisions, primarily in the Swedish market. This impacted GARO's sales. Moreover, some of our major contract customers still have high volumes of GARO's products in inventory due to the current market climate. Our active markets outside Sweden appear more positive, which is why GARO E-mobility intensified its marketing activities in Germany and Poland. In addition, we are now establishing a sales company in Spain. In the coming years, strong growth in plug-in vehicles is expected in Spain, creating a need for the expansion of charging infrastructure.

It is also worth noting that GARO Entity Pro was launched in the first quarter of 2023, which required several large deliveries to fill our customers' inventories, resulting in challenging comparative figures for the business area. We believe that preconditions are in place for recovery in the second half of the year and that the outlook for 2025 is even more positive.

With completed investments in new product platforms and capacity, GARO has the capacity and capability to deliver products and solutions with short lead times to our customers, and we are ready to meet a market recovery when it comes. We have a complete range of destination chargers, where our GARO Entity is the most modern and safest wall box on the market for meeting demand and future needs.

GARO ELECTRIFICATION

Sales in GARO Electrification amounted to MSEK 208, a year-on-year decline of MSEK 40. A continued weak economic climate with high

interest rates led to a significant decline in the market for the construction of new single-family homes and apartments in Sweden and the rest of the Nordic region. However, demand is still relatively healthy for new construction, renovation and energy efficiencies in the public sector, commercial properties and industry. The divided construction market is expected to continue throughout 2024 and then start recovering in 2025. The Riksbank initiated its interest-rate cuts in May, which is expected to have a positive impact on housing construction and investment willingness in Sweden.

ACTION AND EFFICIENCY PROGRAM

During the quarter, we continued to adapt the organization to the prevailing market conditions and carried out another action program, reducing the number of employees in the Group by about 40. The action program primarily concerned the GARO E-mobility business area and the program will achieve full effect in the second quarter of 2024. The action program completed in GARO Electrification in autumn 2023 is now yielding the desired effects with an organization adapted to the prevailing market situation.

SYNERGY EFFECTS

The three product areas included in GARO Electrification combined with GARO E-mobility create major synergy effects. Both large and small complex projects require products and services in most of these areas. The synergy effects create a stable foundation for GARO, especially during times of slowing demand in some product areas.

The expansion of charging infrastructure is driving demand for products in both Electrical distribution products and Project business, creating a unique ability for GARO to offer attractive complete solutions to customers. This is a major competitive advantage in relation to other comparable market players. This synergy effect between the business areas is a great advantage for customers.

MARKET CONDITIONS

The market for charaina infrastructure is arowing structurally with risina numbers of rechargeable vehicles, and we see a continuing strong, longterm trend with further expansion of the charging infrastructure in the European market. We see lower growth in the short term, primarily for macroeconomic reasons, particularly in the Swedish market.

In Sweden, but also in the rest of the Nordic region, the construction of new housing has declined considerably and new production of singlefamily homes and apartments is expected to be weak for several quarters moving forward. On the other hand, demand for other commercial and public construction, combined with renovation requirements and energy efficiency, remains favorable.

All in all, we have a positive view of long-term market conditions, mainly driven by growth in charging infrastructure and its requirements for power supply.

Patrik Andersson President and CEO

Earnings

NET SALES

Net sales for the first quarter amounted to MSEK 292.5 (370.3), down 2 1% or MSEK 77.8 compared with the same quarter in 2023. MSEK 63 of the decline was attributable to the Swedish market.

EBIT

EBIT was MSEK -6.7 (27.8) for the quarter, providing an EBIT margin of -2.3% (7.5). The negative result was primarily attributable to weak sales and the completed action program in GARO E-mobility. Overall, the gross margin remained at the same level as the corresponding quarter of 2023, with the improved margin in GARO Electrification offset by a lower gross margin in GARO E-mobility, which was the result of a changed product mix and production redundancies. During the quarter, prices were raised in several product areas and in various markets.

Currency effects in EBIT for the quarter amounted to MSEK +1.2, compared with the corresponding quarter of 2023 when EBIT was charged with MSEK 5.9 for these effects.

FINANCIAL ITEMS

The Group's net financial items amounted to MSEK -0.2 (-0.4) for the quarter and included currency effects from loans and hedging. Net interest income for the quarter amounted to MSEK -3.0 (-1.2).

ТАХ

Net income amounted to MSEK -8.1 (20.7) for the quarter, and loss per share to MSEK -0.16 (earnings: 0.41). The tax expense amounted to MSEK 1.2 (6.7).

CASH FLOW AND INVESTMENTS

Cash flow from operating activities before changes in working capital amounted to MSEK +8.4 (+25.4), while cash flow from operating activities after changes in working capital amounted to MSEK -43.8 (-46.6). The negative cash flow during the quarter was essentially attributable to a decrease in operating liabilities, while other items such as inventory and accounts receivable showed minor changes. Capital tied-up in inventory declined about MSEK 10 during the quarter, but is still significantly higher than internal targets and is something that management is prioritizing in its work. GARO has also paid a deposit to a supplier for materials ordered but not yet called off. The deposit amounted to MSEK 39.1, which is unchanged compared with the end of the year.

Investments for the quarter amounted to MSEK 4.2 (50.1), of which the entire amount during the quarter was attributable to product development (9.7).

During the quarter, right-of-use assets (leases and rental contracts) declined net by MSEK 1.3 (0).

EBIT, GROUP

LIQUIDITY AND FINANCIAL POSITION

The Group's net debt at the end of the period amounted to MSEK 277.9 (245.6). The Group's net debt excluding lease liabilities, which is to say effects of IFRS 16, amounted to MSEK 206.7 (172.3). Available liquidity in the Group, including unutilized overdraft facilities, amounted to MSEK 84.6 (96.8) and the equity ratio was 51.9% (50.8).

BUSINESS AREAS

GARO divides its operations into two business areas: GARO E-mobility and GARO Electrification.

THE GARO SHARE

At the end of the period, the number of shares amounted to 50,000,000 (50,000,000). The average number of shares amounted to 50,000,000 (50,000,000) for the first quarter of 2024. On March 28, 2024, the share price closed at SEK 33.50 (76.55).

EVENTS AFTER THE END OF THE QUARTER

From the end of the period until the publication of this report, no significant events or conditions have occurred, favorable or unfavorable, that would require further disclosures.

GARO E-mobility business area

GARO E-MOBILITY KEY FIGURES		Jan-Mar 2024	Jan-Mar 2023	R12	Jan-Dec 2023
Net sales	MSEK	84.3	122.2	424.2	462.0
Growth	%	-31	-17	7	10
EBIT	MSEK	-23.6	6.6	-67.4	-37.2
EBIT margin	%	-28.0	5.4	-15.9	-8.1
Investments	MSEK	2.8	46.2	53.5	96.9
Depreciation Number of employees	MSEK	7.6 167	2.9 220	27.1 197	22.3 197

For definitions of key figures, see pages 18-20

NET SALES AND EARNINGS

Net sales in the GARO E-mobility business area amounted to MSEK 84.3, compared with MSEK 122.2 for the same quarter of 2023, which resulted in negative growth of 31%. It is worth noting that GARO Entity Pro was launched in the first quarter of 2023, which required several large deliveries to customers. At the same time, there were also several deliveries of public chargers against back orders. Overall, this provided challenging comparative figures for the business area.

EBIT was MSEK -23.6 (6.6) for the quarter, providing an EBIT margin of -28.0% (5.4). Low sales, a weaker gross margin with production redundancies, and an organization that is built for growth are the main reasons for the negative earnings. The campaign activities for wall boxes (GLB) built on previous platforms that commenced in autumn 2023, are ongoing. The campaigns explain the slightly lower gross margin to some extent.

OPERATIONS

During the quarter, order intake declined for the business area, mainly due to the prevailing market situation and the fact that some of the major contract customers still had GARO's products in inventory. GARO Entity Compact, the market's only wall box for charging at home that is thirdparty certified according to current charging standards, is facing a market that is under severe price pressure. GARO's uncompromising focus on safety remains firm.

During the quarter, an action program was carried out in the business area. The program reduced the number of employees in production by about 40 jobs in total for the production facilities in Sweden and in Poland. The program will come into full effect in the second quarter Cost control and an efficient organization will remain a major focus area for the business area.

Demand for public charging points is the main driver of sales in the business area. During the quarter, sales in Sweden and the Nordic region were 49% and 43% lower, respectively, compared with the same quarter of 2023. GARO is primarily affected by the market trend in Nordic markets, where the company holds considerable market share. At the same time, growth of 15% was noted for other markets in Europe and GARO intensified its marketing activities in Germany, Poland and Ireland. In addition, a sales company is under establishment in Spain.

It is gratifying that several major players became aware of GARO Entity Pro as a cost-efficient wall box in public environments. One example is Aneo, an existing customer in Norway that has now become a major customer for GARO in Sweden as well.

Product development for new variants of the LS4 public charging stations are ongoing, as well as separate payment stations to ensure compliance with the new EU Alternative Fuels Infrastructure Regulation (AFIR'). GARO welcomes this initiative as it creates new sales opportunities. The Group is at the forefront of meeting tougher requirements for payment solutions and the ability to communicate between chargers and cars.

The first quarter was hectic for the recently established sales company in Germany, GARO E-mobility GmbH. The company made its first deliveries of Eichrecht-compliant2 products, which were well-received by customers. GARO will continue to expand the product portfolio for the German market with more Eichrecht-compliant products during the year.

Revised regulations in the UK impacts two products for semi-public environments. GARO maintains a positive continuous dialog with suppliers in order to adjust the products for new requirements.

² Charging stations adapted to comply with the German market's regulations for public charge points.

¹ Alternative Fuels Infrastructure Regulation.

THE MARKET

The market for home chargers is slightly subdued and weaker than expected, due to the prevailing market situation with macroeconomic uncertainty, which is affecting purchasing patterns and investment

decisions. The expansion of charging stations for major projects at, for example, commercial properties, tenant-owner associations and public places was subdued during the quarter.

NET SALES, GARO E-MOBILITY

EBIT, GARO E-MOBIILITY